A loan has quarterly payments. The APR is 16%, and interest is compounded 12 time(s) per year.The effective interest rate that would be needed to find the payment amount for the loan is_%.Margin of error for correct responses: +/-.02 (%)Rounding and Formatting instructions:Do not enter dollar signs, percent signs, commas, X, or any words in your response. Donot round any intermediate work, but round your *final* response to 2 decimal places(example: if your answer is 12.3456, 12.3456%, or $12.3456, you should enter12.35).

When the borrower borrows a loan from the lender, he has to pay a rate of interest on the borrowed…

Answered: A loan has quarterly payments. The APR…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Enter your dollar answers rounded to the nearest two cents and precede numbers that are less than zero (0) with a minus sign (–).) Buy On Time or Pay Cash Cost of Borrowing 1. Terms of the loan a. Amount of the loan $10,000.00 b. Length of the loan (in years) 5 c. Monthly payment $188.70 2. Total loan payments made ($ per month months) $ 3. Less: Principal amount of the loan $ 4. Total interest paid over life of loan $ 5. Tax considerations: – Is this a home equity loan? no – Do you itemize deductions on your federal tax return? yes 6. What federal tax bracket are you in? 35% 7. Taxes saved due to interest deductions ($ x %) $ 8. Total after-tax interest cost on the loan $ Cost of Paying Cash 9. Annual interest earned on savings (6% x ) $ 10. Annual after-tax interest earnings ($ x %) $ 11. Total after-tax interest earnings…

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